Ninja Gaiden begins with a cinematic animation in which two ninjas duel to the death; one goes down. It is revealed that the doomed ninja is the father of Ryu Hayabusa. When Ryu learns of this, he embarks on a quest to find out who killed his father and why. This quest takes him to America to find an archaeologist with whom Ryu's father was working. From there, Ryu becomes embroiled in an evil, supernatural conspiracy involving a villain named Jaquio who has plans to use an ancient castle and some relics to unleash a terrifying evil upon the world.
In comparison to the better known console version this game is a traditional fighting game similar to Double Dragon in which the player walks from left to right while battling numerous enemies. Only if all foes are dispatched of, the player can advance in the level. It's also possible to perform special attacks and use weapons. The latter are either collectable power-ups or environmental objects like phone boots.
Ryu can attack his enemies using his his bare hands and feet or using a sword (for a limited time). He can also perform moves such as a flying neck throw, a back flip and hang kicks, performed while hanging in scenario objects. Throwing enemies against objects such as phone cabins, oil drums or dumpsters will destroy them, revealing power ups such as health items and swords. At some points, Ryu will have to perform acrobatic moves to carry on. He has a life bar starting with five units.
The game takes place in United States' locations such as Las Vegas, North Carolina, Los Angeles, the Grand Canyon and Brooklyn. The enemies in those stages are mostly of the same five kinds, including Jason Vorhees' look-alikes and other masked men. There is a boss fight at the end of each stage.
A two-player co-operative game is also featured. Whenever the player dies, a continue screen will appear showing Ryu chained to a table while a circular saw descends upon him.